Sustainability and insurance: A Portugal perspective

SemPRe event, September 2019Dr. Gillian Rutherford

Agenda

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Global Macro Risks/Trends

Resilience&

Protection Gap

Sustainability&

Solutions

Global macro risk map interdependencies 2018

3Source: Global Risk Report 2018, WEF

Background: Environmental risks have grown in prominence in recent

years. 2018 saw a number of extreme weather eventscharacterized by high-impact hurricanes, extreme temperatures and the first rise in CO2 emissions in four years

Biodiversity collapse and degrading ecosystems are urgent Business Issues.

The global economy faces a mix of long-standing vulnerabilities and newer threats that have emerged or evolved in the years since the financial crisis

Trends

Risks

Much of this is driven by a relentless thirst for growth

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1970 1976 1982 1988 1994 2000 2006 2012 2018

Man-made disasters Weather related NatCat events NatCat

Focus AreaNat Cat’s remain the largest threat but not the only threat

4Source: Swiss Re Institute

2018: 181 natural catastrophes (e.g. Earthquakes)

123 man-made disasters (e.g. Terrorism)

166 Weather related NatCat events (e.g. Storms)

> 11’000 people lost their lives

Total economic losses: USD 337 billion

Possible impacts on our Industry:

Increasing need for protection

Insurance industry needs to rethink access to affordable, relevant and effective risk managementtools and insurance safety nets

Proactive risk management can help protect whole economies

Agenda

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Global Macro Risks/Trends

Resilience&

Protection Gap

Sustainability&

Solutions

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Our Vision: we make the world more resilient

OUR MISSION: Together, we apply fresh perspectives, knowledge and capitalto anticipate and manage risk. That’s how we create smarter solutions for our clients, helping the world rebuild, renew, and move forward.

Measuring resilience

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Resilience: The ability to recover after a shock event

SRI Insurance Resilience Indices

Measure the contribution of insurance to the financial stability of households and

organisations

SRI-LSE Macro Resilience Index

Tracks the ability of economies to withstand shock events over time

The two are correlated. Closing protection gaps: positive for macro resilience and insurance resilience.

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SRI Insurance Resilience Indices: New record high protection gaps

Nat CatExpected annual loss from storms, earthquakes and

floods

Estimated insurance coverage for primary nat cat perils USD 222bn 24%

Mortality Income needed to maintain survivors’ living standards

Life insurance, financial assets, social security USD 386bn 45%

Health Total healthcare expenditure (funded)

Total healthcare expenditures minus households’ stressful

out-of-pocket expensesUSD 616bn 93%

Composite -- -- USD 1.2trn 54%

Starting the USD 1 trillion debate

Source: Swiss Re InstituteNote: All figures for 2018 and global; Protection gap is in premium equivalent terms

Need (N) Available (A) Protection Gap (N – A)

Insurance Resilience Index (A ÷ N)

PORTUGAL RESILIENCE INDEX = 41%

Portugal Protection Gap

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The shortfall in the amount of cover necessary to maintain current living standards of dependents

=

Total economic losses – Insured losses

49% for Nat Cat overall i.e. 51% covered

85% for Earthquake i.e. only 15% covered

? for Health

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Open a browser/app

on your smartphone

Go to slido.com

Enter the code

#Renewals19

Submit your votes:

1) Extremely 2) Very3) Somewhat4) Not at all

Slido app – How worried are you about the 85% earthquake protection gap in Portugal?

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Open a browser/app

on your smartphone

Go to slido.com

Enter the code

#Renewals19

Submit your votes: 1) Life changing 2) Financial pain3) Somewhat4) Not at all

Slido app – How have you been personally impacted by a Nat Cat event over the last decade?

Agenda

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Global Macro Risks/Trends

Resilience&

Protection Gap

Sustainability&

Solutions

Linking Resilience and Sustainability

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• sus-tain-able1. :capable of being sustained

2. a: of, relating to or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged

3. b: of or relating to a lifestyle involving the use of sustainable methods

Sustainability Solutions contribute significantly to a community’s ability to bounce back sustainably in the face of adversity. It creates economic, environmental, and social benefits that

contribute to the UN Sustainable Development Goals

• re-sil-ience1. : the capability of a strained body to recover its

size and shape after deformation caused especially by compressive stress

2. : an ability to recover from or adjust easily to misfortune or change

Sustainability: the principle of meeting present needs without compromising the ability of future generations to

meet theirs

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The Group Sustainability Strategy contributes to Swiss Re’s vision of making the world more resilient

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Swiss Re has long tradition of integrating sustainability into its business

Own environmental footprint

Asset investments

Risk Management framework Products, Services and Solutions

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2 3

4Close to 100% of assets invested according to ESG criteriaUSD 1.6bn of green bonds as of end FY 2018

Group-wide Sustainability Risk Framework (SRF) since 2009In 2018, detailed analyses on 247 transactions of which

40 were stopped

100% greenhouse gas neutral since 20032,924 COyou2 subsidies granted to staff in 2018

3,400 wind and solar farms insured Nat Cat risk pools; indemnity/parametric coversHealth solutions

Insurance solutions support sustainability in multiple ways.We can improve access, affordability and the risks we cover.

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Renewable Energy Nat Cat risk pools Digital health platforms

Highlights of Swiss Re’s Sustainability approach | June 2019

Societal topics

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Renewable energy solutionsEnabling the transition to a low C economy

Example: Swiss Re phasing out thermal coal coverage and supporting ever more renewable energy risks.

Portugal is third in Europe in terms of %age Renewable Energy contribution. 54% in 2018 generated through Renewables.

Products, services and solutions

Highlights of Swiss Re’s Sustainability approach | June 2019

Societal topics

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Building societal resilienceRisk pools

Example 1: New Zealand Earthquake Commission and recovery from Christchurch earthquakes

Example 2: Parametric earthquake covers

Innovative solutions can help solve Portugal’s 49% Nat Cat and 85% Earthquake protection gap.

Products, services and solutions

Highlights of Swiss Re’s Sustainability approach | June 2019

Societal topics

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Driving digital insurance solutionsImprove access, affordability, and the ways we can help our customers.

Products, services and solutions

Example: Health solutions helping people manage their Type II Diabetes into remission via a digital platform.

Well over a million people in Portugal have Type II diabetes. 14% of population. More if you take pre-diabetes into account.

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Open a browser/app

on your smartphone

Go to slido.com

Enter the code

#Renewals19

By finding ways to:

1) Improve affordability2) Improve access3) Cover more risks4) They can’t

Slido app – how can insurers make the most impact in driving sustainability?

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“We cannot solve our problems with the same thinking we used when we created

them”Albert Einstein

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Legal notice

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